South Korea on Tuesday laid out a set of bold goals to support private-sector-led growth in 2023, promising financial aid to achieve a trade surplus and attract foreign investment in a bid to minimize the impacts of a global economic slowdown.
While 2023 is expected to be challenging for the economy amid growing uncertainties in the global market, the government said it will achieve $680 billion in exports and attract more than $30 billion of foreign investment, while investing some 100 trillion won ($79 billion) in the facility sector.
"Difficulties are expected next year due to the ongoing global economic downturn, steep drop in both export and investment and also the spread of trade protectionism and increasing energy crisis," the Ministry of Trade, Industry and Energy said in its latest report on trade and industry outlook for next year.
Trade Minister Lee Chang-yang delivered the report and the ministry's plan for next year in a briefing to President Yoon Suk-yeol on Tuesday, together with Minister of SMEs and Startups Lee Young at Cheong Wa Dae, the former presidential office compound in Seoul. All ministries are delivering similar briefings to the president through January.
"The Industry Ministry will pursue improvements not by individual industry sectors, but by the entire industry ecosystem, in the perspective of a 'big push,' as we promote the great transformation of industries," Trade Minister Lee said during a joint press conference with the SMEs minister after the presidential briefing.
"We will focus on fostering capabilities of all actors and actively push for a drastic improvement in productivity of industries that utilize data technology, and enhance the competitiveness of the entire industry ecosystem."
During the briefing, Yoon called for ministries to carry out policies for a fair and efficient operation of the market, and highlighted the importance of creating quality jobs for the people, the trade minister said.
According to the Trade Ministry, South Korea is expected to see trade losses next year, with exports falling 4.5 percent on-year, due to an expected decline in semiconductor prices.
To get through the challenging year ahead, the ministry said it has set up economic crisis management and gearing up for the future as its policy direction and will concentrate efforts on four key missions: to promote pangovernmental efforts to achieve a surplus in trade, revive vitality and growth of the real economy, establish an innovative system for energy security and come up with preemptive trade measures in the national interest.
At the same time, it set a bold goal to achieve a trade surplus next year, offering the largest financing aid of 360 trillion won. The ministry said it will also establish low-interest loan rates of 2.7 percent to support beginner exporters.
The country will pursue industrial transformation to boost exports in the three prominent sectors, which are nuclear power, the defense industry as well as the engineering, construction and procurement industry.
The efforts include full-fledged support for Korean companies in their efforts to bag overseas contracts in the defense industry, and for tapping into nuclear power markets outside of Korea, such as those of the Czech Republic, the Philippines and Britain, the ministry said.
The government will also earmark 3.5 trillion won for boosting nuclear power plant operations here, with the Shin Hanul nuclear power units Nos. 3 and 4 that recently resumed construction, raising the financial input by 1.1 trillion won on-year.
The ministry will seek foreign investment of $30 billion in the advanced technologies sector, which includes semiconductors and secondary batteries.
To adapt to the fast-changing trade environment, the government will also consider joining regional initiatives and promote consultation with other countries, the ministry said.
South Korea will consider joining the "Fab 4" alliance of semiconductor powerhouses, also known as the "Chip 4" alliance that has been proposed by the US, the ministry said.
The Fab 4 aims to foster connections between global chip powerhouses Korea, Japan and Taiwan that have top capabilities in manufacturing and production of critical equipment and materials. The envisioned alliance would cover all major areas of the chips value chain.
Over the US' Inflation Reduction Act, which scrapped tax credits for Korean electric vehicle makers selling their cars in the US market, the Korean ministry said it will make use of the dialogue channel set up with Washington to negotiate a better deal for Korean companies.
The ministry also will establish a special team to come up with policies to respond to Europe’s Carbon Border Adjustment Mechanism, a carbon tariff the union implemented on carbon extensive products that will take effect in 2026.
It will also work on establishing free trade agreements in Latin America and the Middle East, and establish a supply chain network to boost trade.
In the report, the ministry also explained this year’s achievements. South Korea has put the energy policy "back on its feet," discarding the former administration’s policy to phase out nuclear power. South Korea also succeeded in exporting nuclear power plants for the first time in 13 years, the ministry said.
By Jo He-rim (email@example.com)